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Tax Implications for Victims of Investment Fraud

Posted by CFTC Staff /
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If you've been a victim of investment fraud, there may be implications for your federal taxes once the investment fraud is discovered.

  • There are tax treatments that may be applicable to erroneously reported income and losses due to investment or trading fraud, including so-called "Ponzi schemes".
  • The Internal Revenue Service (IRS) provides an optional process under which investors who meet certain qualifications may treat the impact of financial fraud as a theft loss deduction.
    • This process avoids the potential difficulty of proving how much income reported by the taxpayer in prior years was fictitious or a return of capital.
  • To learn more about the rules regarding this issue, visit www.irs.gov/uac/Help-for-Victims-of-Ponzi-Investment-Schemes.

If you have questions, are aware of suspicious activities, or believe you have been defrauded in the commodity futures, commodity options, or swaps markets, please contact the CFTC immediately at SmartCheck.gov/report.

For income tax questions, please contact the IRS at www.irs.gov/uac/How-to-Contact-the-IRS-1.

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